Good corporate governance is important for every business institution, but it is most critical for financial institutions, Finance Minister Larry Howai said yesterday.
“(These institutions) are the custodians of household and business sector resources. Their intermediary role is only possible when society has full confidence in the financial system (including regulators),” Howai told the audience yesterday at the Energy Chamber’s breakfast meeting on Corporate Governance Practices at the Hyatt Regency (Trinidad), Port of Spain.
Howai’s statement come one day after four board members of State financial institution First Citizens were not re-elected to their positions during the Group’s annual general meeting on Monday. Two, including former chairman Nyree Alfonso, did not offer themselves for re-election, while two others were voted out by Corporation Sole (the government entity—usually the Minister of Finance—that ultimately oversees the management of State enterprises).
The Corporation Sole was represented at the AGM by permanent secretary in the Ministry of Finance Vishnu Dhanpaul and also did not support the re-election of Alfonso.
The First Citizens board, particularly Alfonso, had come under heavy public pressure because of (Alfonso’s) comments on the role of ethics and morals in business transactions in the context of investigations into a 659,588 share purchase during the company’s initial public offer last year by the bank’s now fired chief risk officer Philip Rahaman, who had purchased the shares from the employee allocation allegedly as a front for his cousin, Imtiaz Rahaman and his affiliates. That matter has been referred to the Director of Public Prosecutions and the acting Commissioner of Police for investigation.
“Our local experience coupled with spectacular failures in the global financial system tell us that the issue of ethics and moral standards are concerns for all of us. Good corporate governance and ethical conduct are essential for a most stable business environment and the role of the board of directors in both the public and private sectors in establishing ethical standards and good governance is critical,” Howai said.
Part of the accountability inherent in good corporate governance practices include integrity, honesty, professionalism and transparency, he said.
“I have impressed upon all directors of state enterprises the urgent need to encourage their respective organisations to adopt the Trinidad and Tobago Corporate Governance Code from November 2013... Once established (the adoption of the Code) will no doubt lead to transparency and accountability and by extension improve efficiency and service delivery,” he said.
Howai said the State enterprise sector already had a comprehensive set of guidelines designed to ensure good governance, including a performance monitoring system, internal audit frameworks, legal frameworks like the Constitution, and bodies like the Integrity Commission.
“Notwithstanding this comprehensive framework the sector continues to be plagued with (concerns). What this confirms is having these principles in place is not enough. There must be a strong commitment to enforcement and rigid regulatory oversight,” he said.